Hair follicle may play an important role in epidermal homeostasis and in skin tumor formation. It also provides an excellent model system for studying epithelial-mesenchymal interactions, because it undergoes cyclic growth (the "hair cycle") which involves the specific interactions between the follicular stem cells and dermal papilla - a specialized population of mesenchymal cells. Although follicular stem cells were thought to reside in the matrix area of the lower bulb, the two co-PI's have recently demonstrated that such cells may actually reside in the upper follicle in an area called the "bulge", which represents outer root sheath cells located at the insertion site of the arrector pili muscle. This area also marks the lower end of the "permanent" portion of the follicle, since keratinocytes below degenerate during the catagen phase of the hair cycle and are thus "dispensable." Based on these findings and a critical re- evaluation of the literature, we recently proposed that: (i) during early anagen the normally quiescent bulge stem cells undergo transient proliferation in response to signals from dermal papilla; and (ii) during anagen phase IV, the dormant and "condensed" dermal papilla undergo transient proliferation in response to signals from the proliferating matrix keratinocytes (Cell 6:1329, 1990). In order to test these hypotheses, we will perform three series of experiments. First, we will characterize the growth and differentiation properties of follicular stem cells by (1) generating monoclonal antibodies to various subpopulations of follicular cells, (2) studying the growth factor requirements of cultured follicular keratinocytes and dermal papilla cells, and (3) studying the in vivo and in vitro interactions between follicular keratinocytes and dermal papilla cells. Second, we will study the possible involvement of follicular cells in the formation of chemically induced skin tumors. We have obtained preliminary data that cast serious doubts about the validity of the current dogma that tumor initiation proceeds more efficiently during resting phase of hair cycle. Therefore, we will re-examine this issue by determining (a) the initial distribution and long-term persistence of topically applied carcinogens in hair follicle, (b) the biological behavior of tumors derived from anagen- vs. telogen- initiated animals, and (c) the site of origin of these chemically induced tumors. Finally, we will study the possible involvement of several growth factors in regulating the hair cycle. These data, collectively should improve our understanding on the biochemical basis of hair cycle control, on the possible involvement of hair follicle in skin cancer formation, and on the possible mechanisms of some hair loss diseases including alopecia areata.